Home prices in record drop

[alienlovechild 75]

NEW YORK (CNNMoney.com) -- Home prices declined at a record pace around the nation in the final three months of 2008, according to an industry report released Tuesday.

The S&P Case-Shiller National Home Price Index reported that prices sank a record 18.2% during the last three months of 2008, compared with the same period in 2007.

Case-Shiller's index of 20 major metropolitan areas fell 18.5%, also a record.

"The broad downturn in the residential real estate market continues," said David Blitzer, chairman of the Index Committee at Standard & Poor's, in a statement. "There are very few, if any, pockets of turnaround that one can see in the data."

All 20 metro areas in the 20-city index recorded declines, with home prices falling more than 20% in eight of those cities. National home prices have dropped 26.7% since they peaked during the second quarter of 2006.

In a separate release from the government, the Federal Finance Housing Agency (FFHA) reported that prices on its home purchase index fell 8.2% during the quarter on a year-over-year basis, and 3.4% compared with the third quarter of 2008.

The government index, which used to be known as the OFHEO home price index, differs from the S&P Case-Shiller index in that it only compares sales of homes that are purchased with so-called "conforming loans", ones guaranteed or bought by mortgage giants Fannie Mae and Freddie Mac.

Homes purchased without financing or ones too expensive to qualify for a Fannie-Freddie loan are not counted in the FFHA statistics.

No slowdown

The decline does not seem to be slowing - just the opposite. The average home price dropped 2.5% between November and December in the 20 top metro areas. That was a larger increase than the 2.3% drop a month earlier.

"The deterioration in U.S. home prices continues apace, with the rate of decline picking up steam late last year," said Mike Larson, an analyst with Weiss Research."Rising foreclosure activity is putting pressure on prices, as lenders are increasingly pursuing a 'take what we can get' selling strategy."

Karl Case, the Wellesley economist who, with Yale economist Robert Shiller, co-developed the index, pointed out during a news conference following the index's release that the markets experiencing the steepest falls also enjoyed the biggest run-ups during the boom.

"Those markets were driven by subprime lending expansion from the summer of 2003 on," he said. "After the [Federal Reserve's lowered interest rates] to fight against the recession of 2001, subprime took off like gangbusters."

Sun Belt cities suffered the worst declines, with Phoenix down 34%, Las Vegas off 33% and San Francisco lower by 31.2%. Denver fared best, down 4%, while Dallas was lower by 4.3% and Cleveland slid 6.1%.

Of the nation's three largest housing markets, New York home prices dipped by 9.2%, prices in Los Angeles dropped by 26.4% and Chicago prices declined 14.3%.

Despite the drop in home prices, which has given affordability a big boost, the pace of home sales continues very weak. Existing homes have been selling at an annualized rate of fewer than 5 million, down more than 40% from the peak.

New home sales, at an annualized rate of about 331,000, are at their lowest level since the Census Bureau began keeping records back in 1963.

The worst may be yet to come, according to Peter Schiff, president of Euro Pacific Capital, an investment firm specializing in overseas investments and a noted bear on home prices.

That reality includes stock prices down to their lowest level in nearly 12 years. "Where would real estate prices be if they went back to where they were 12 years ago?" said Schiff.

"We'll learn more in the spring market," he said. "Sales should pick up and we'll begin to see how well the president's program is working. There's no evidence in the data to tell us that home prices will bottom out."

http://money.cnn.com/2009/02/24/real_estat...sion=2009022411

Edited February 24, 2009 by alienlovechild

[alienlovechild 75]

Remember when homes prices were big news?

Nothing seems that shocking now as we debate American Idle, Octomom and politcal cartoons with chimps.

[I AM NOT THAT GUY 5,715]

Good time to buy, bad time to sell.

Buy and hold.

[one...two...tree 2,762]

Remember when homes prices were big news?

Nothing seems that shocking now as we debate American Idle, Octomom and politcal cartoons with chimps.

I think you're overlooking the threads we've had here on the housing crisis.

[EstebanTrabajos 7]

Yeah bunch of optimists, don't you see you have to be worrying and being scared all the time??

If I were a moderator I would erase every single happy threat and only allow threads related to the crisis, war, gay marriage, illegal immigration, and William Hung.

MUAHAHAAAA

[Jasman0717 9]

I was going to use my equity to pay cash for a place in Colorado and then spend a lot of time traveling. So much for that idea, my condo lost 300k in equity over the last year which is now going ot require me working longer

[alienlovechild 75]

Yeah bunch of optimists, don't you see you have to be worrying and being scared all the time??

The President doing a fine job at it so what can I say?

If I were a moderator I would erase every single happy threat and only allow threads related to the crisis, war, gay marriage, illegal immigration, and William Hung.

There are happy threads?

[spookyturtle 9,466]

Yeah bunch of optimists, don't you see you have to be worrying and being scared all the time??

The President doing a fine job at it so what can I say?

If I were a moderator I would erase every single happy threat and only allow threads related to the crisis, war, gay marriage, illegal immigration, and William Hung.

There are happy threads?

Not here.

[I AM NOT THAT GUY 5,715]

Yeah bunch of optimists, don't you see you have to be worrying and being scared all the time??

The President doing a fine job at it so what can I say?

If I were a moderator I would erase every single happy threat and only allow threads related to the crisis, war, gay marriage, illegal immigration, and William Hung.

There are happy threads?

Not here.

[spookyturtle 9,466]

[NickD 203]

Not seeing any bargains around here, even in communities where they are claiming 20% of the population is way behind on their property taxes. In some areas home prices have increased by 500% in the last twenty years, but you are buying a twenty year old home that needs a lot of work.

Key ingredients for a home today is sawdust and plastic, and the plastic is not even close to the quality of the plastic you toss away after taking sip out of your bottled water. These homes should be depreciated just like the junk we buy to drive around in. Been looking at new appliances, the tin is not even as good as in a tin can that is also tossed away. They have it all backwards.

[tallcoolone 102]

Houses have not lost much if any in Dallas Market.

I plan on upgrading this summer.....